Friday, November 30, 2001


The House passed legislation yesterday to help the insurance industry cover the cost of claims from any future terrorist attacks. Passage came amid a partisan dispute over restrictions on personal lawsuits seeking damages.

The vote was 227-193, mostly along party lines, as Democrats withdrew their earlier support after restrictions on terrorism-related litigation were added to the bill. The changes clouded prospects for agreement with the Democrat-controlled Senate on compromise legislation.

President Bush weighed in on the controversy after the vote, commending the House “for taking an important step toward ensuring the continued availability of insurance for terrorist-related acts and for ensuring that victims of terrorism don’t also become subjects of unfair lawsuits.”

The bill would commit the government, for at least a year, to covering 90 percent of losses from another major terror attack; insurance companies would pay the rest. The measure would require insurers to reimburse the government for the aid.

Companies that write policies protecting property were hit hard by the September 11 attacks, with losses estimated at $30 billion to $70 billion. The industry remains healthy overall.

Provisions pushed by Republican leaders would restrict the ability of individuals to seek further damages in court. The measure would bar suits against companies, building owners, security firms or other businesses on the grounds that those entities were negligent and failed to protect people against attack.

At the White House’s request, provisions barring payment of punitive damages and capping attorneys’ fees were inserted Wednesday. Democrats in the House and Senate oppose such limitations, and there are no related provisions in a bipartisan draft version in the Senate.

A competing bill proposed yesterday by Sen. John McCain, Arizona Republican, does contain a ban on punitive damages. Republicans long have sought to curb trial lawyers, traditionally major donors to the Democratic Party.

Rep. Louise M. Slaughter, New York Democrat, said the liability provisions were “a heavy-handed attempt to curtail victims’ rights.”

Lawmakers warned that the dispute could sink the insurance legislation. The changes led the Consumer Federation of America and Consumers Union to withdraw their support for the bill.

Proponents of the legislation want to send it to Mr. Bush next month. Many insurance contracts expire Dec. 31, and insurers generally must give policyholders 30 or 45 days’ notice before cancellation or major changes in coverage.

The legislation is moving more slowly in the Senate. The draft version endorsed by the administration would not require reimbursement. It would have the Treasury help cover costs of future attacks for two years, with the industry paying the first $10 billion each year.

Supporters of the legislation say it is needed to avert major economic disruption. They say it is not an industry bailout and contend it would be difficult to get bank loans for projects such as building construction, pipelines and bridges without terrorism coverage.

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